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Risks
1. Dependence on the performance of the Real Estate Market: Real Estate Investment Trusts (REITs) are heavily dependent on the performance of the real estate market. The ability of Allied Properties Real Estate Investment Trust to generate adequate returns for investors is directly linked to the real estate market and its factors such as interest rates, tax laws, economic cycles, and publicly available information.
2. Volatile Share Price: The share price of REITs is known to be volatile as the performance of the underlying real estate market can quickly impact the share prices of the REIT. A decline in the REITâs share price can have an adverse effect on investorâs portfolio returns.
3. Concentration Risk: Allied Properties Real Estate Investment Trustâs holdings are concentrated in a limited number of geographical areas and within specific property types. This can limit the REIT from taking advantage of opportunities in other areas or from diversifying its portfolio holdings.
4. Leverage Risk: Allied Properties Real Estate Investment Trust has used significant levels of leverage to finance its acquisitions and expansions. As the REIT is exposed to fluctuating interest rates and associated debt service payments, an increase in interest rates could have a negative impact on the REITâs profit margins.